World Markets Sell-off; Norway Lifts Rate

123jump.com Staff
28 Oct, 2009
New York City

Stocks worldwide are on the defensive. Norway increased its key lending rate by 25 basis points to 1.5% and joins five other nations that have either raised or tightened monetary policy. On the earnings front, SAP, ArcelorMittal and Cannon declined. The dollar gained as investors unwind carry trade.

[R]9:00 AM New York – Stocks worldwide are on the defensive. Norway increased its key lending rate by 25 basis points to 1.5% and joins five other nations that have either raised or tightened monetary policy. On the earnings front, SAP, ArcelorMittal and Cannon declined. The dollar gained as investors unwind riskiest carry trades.[/R]

World markets were on the defensive as investors focus on the prospect of higher interest rates and weak demand. Corporate earnings were mixed after ArcelorMittal, Canon Inc and SAP AG reported mixed bag of news.

ArcelorMittal, the largest steelmaker reported third quarter operating earnings of $1.58 billion. SAP AG, Germany based manufacturing software developer lifted its estimate of annual sales decline. Canon quarterly earnings declined and it expects weak annual results.

The dollar continued its rise against the yen, the euro and the Australian dollar. Currency speculators are looking for a technical rebound in the dollar.

Norges Bank increased its key lending rate 25 basis points to 1.5% and the statement from the bank noted, “Activity in the Norwegian economy has picked up more rapidly than expected.”

Central banks around the world are looking to tighten the monetary policy. Yesterday the Reserve Bank of India set the stage of higher interest rates and central banks in Hong Kong, South Korea and Singapore are focused on containing inflation.

Hong Kong Monetary Authority lifted capital requirement for mortgage loans and China is expected to develop a similar measure to curb speculation in the property market.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 137.41 or 1.35% to 10,075.05, Hang Seng index in Hong Kong decreased 408.01 or 1.84% to 21,761.58, and CSI 300 index in China higher 14.60 or 0.44% to 3,329.33. ASX 200 index in Australia decreased 68.40 or 1.44% to 4,685.10. The FTSE Bursa KL Composite index in Malaysia was lower 11.25 or 0.89% to 1,249.05.

The Kospi Index in South Korea decreased 39.82 or 2.41% to close at 1,609.71, SET index in Thailand closed lower 10.59 or 1.48% to 703.95. JSE Index in Indonesia decreased 69.89 or 2.88% to 2,355.31. The Sensex index in India decreased 69.91 or 0.43% to 16,283.49.

Europe Markets Review

In London FTSE 100 Index traded lower 89.80 or 1.73% to 5,111.17, in Paris CAC 40 Index decreased 61.68 or 1.65% to 3,682.27 and in Frankfurt DAX index traded lower 89.15 or 1.58% to 5,545.87. In Zurich trading SMI decreased 75.64 or 1.19% to 6,292.33.

ASX 200 Index Movers

Macmahon Holdings Limited led the decliners in the ASX 200 index of 8.0% followed by losses Bradken Limited of 7.7%, in Nexus Energy Limited of 7.0%, in Abacus Property Group of 6.6% and in Transfield Services Limited of 6.6%.

PaperlinX Limited gainers in the ASX 200 index with a rise of 4.7% followed by gains in AWB Limited of 3.2%, in Sundance Resources Limited of 3.2% and in Goodman Fielder Limited of 3.1%.

Nikkei 200 Average Movers

Chuo Mitsui Trust Holdings Inc. led the decliners in the Nikkei 225 index of 7.6% followed by losses in Tokyo Electron Limited of 6.0%, in Advantest Corporation of 5.1%, in Yahoo Japan Corporation of 4.7% and in Fujikura Ltd. of 4.7%.

Honda Motor Co., Ltd. led gainers in the Nikkei 225 index with a rise of 3.3% followed by gains The Shizuoka Bank, Ltd. of 3.0%, in T&D Holdings, Inc. of 2.5% and in Oki Electric Industry Company, Limited of 2.4%.